03 July 2010

Trimming my Portfolio and Strategy.

I had been holding quite a number of shares.

Some of them are traded based on a well-defined strategy, i.e. my "value stocks portfolio" was built according to Graham's "net-working-capital" approach (with a little modification).

Others are selected based on different style and prospect. AirAsia and Hartalega were bought due to their long-term growth potential. When I bought Titan in 2007, I was expected to ride on its 3 ~ 4 years growth (capacity) only, which was expected to end soon by 2011. For MAS-PA, it is a low-risk investment with attractive return rate, and holding-till-maturity was my initial thought.

However, I had decided recently to refine my investment style into a simple investment strategy. In the trimming process, I had decided to sell off Titan and MAS-PA, concentrating all my future effort on a single long-term-growth-stocks strategy.

Details of my "growth-stocks" strategy are:

  • High growth: company's earning that are expected to achieve 20% CAGR or above in the coming 3~ 5 years.
  • Growth sustainability: expected to maintan at least 10%p.a. growth-rate for another 5~10 years.
  • When to buy: trailing PE at 10 or lower.
  • When to sell: Long-term holding. Sell only when the fundamental of the company had changed, or it is found that a serious mistake had been made during analysis, or when there occur a more attractive investment opportunity.
  • Diversification: 5 ~ 10 stocks.

According to these strategy, Hartalega and AirAsia will be kept in my portfolio because I think they fulfill the growth criteria. Titan and MAS-PA will be sold and switched to some others stocks that meet the requirement.

After this trimming process, my investment holdings will only consist of two simple portfolios:

  • value-stocks.
  • long-term growth stocks.

the value-stocks is an experimental portfolio set up to examine the net-working-capital approach. All my future savings will be invested into long-term growth stocks.

Hope that this trimming decision will make my investment life simple and easy in the future.


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